Press Review - May 22, 2018

05.22.2018 By Oana Gavrila

Private Pension Contributors Guaranteed Their Money Upon Retirement

Romania currently lacks legislation forcing the state to guarantee for the amounts collected by the mandatory private pension system.

However, upon retirement, all contributors are guaranteed to get back at least the amount they contributed minus administrative fees, as fund managers have to constitute provisions. There is also a guarantee fund for private pensions constituted from contributions of fund administrators, said Radu Craciun, head of Romania's association for private pensions.

In case a fund administrator withdraws or goes bankrupt, contributors' money is not lost, as the administrator and the fund are two separate entities. Should an administrator have financial trouble, the financial watchdog would have to ensure the fund is taken over by another administrator and continues to exits, said Craciun.

Over 7 million Romanians have accumulated savings amounting to approximately EUR9 billion through the Private Pensions Pillar II in the first 10 years of the system’s functioning. The system was introduced in 2008.

Leu Hits Highest Level in 5 Months Vs Euro

The Romanian leu appreciated against the euro by midday Monday to a reference rate of RON4.6228 to the euro, the highest level since December 2017.

On May 7, the central bank raised the benchmark interest rate to 2.5% a year from 2.25%.

Dragnea Says Party Not Considering Impeaching President

Ruling party leader Liviu Dragnea said Monday the party was not considering impeaching the head of state over the criminal complaint submitted by the Liberal Party leader against the prime minister.

“We hope this aberrant course of action will not cross a red line. We are not considering impeachment but we will not remain passive while they try to take over the government illegitimately,” said Dragnea.

Liberal Party leader Ludovic Orban submitted a criminal complaint against prime minister Viorica Dancila over her Cabinet's one-sided attempt to move the country's embassy in Israel from Tel Aviv to Jerusalem.

President Calls on Government to Clarify Plans for Private Pensions

Romanian President Klaus Iohannis on Monday urged the government to clarify its plans for private pension Pillar II and stop the “ping-pong” of statements on the matter.

The president said the government's approach is highly amateurish and toxic. On Monday, a government document showed plans to suspend contributions to the private pillar until the end of the year. Previously, the ruling coalition had talked about abolishing or nationalizing the mandatory private pension pillar.